ScotiabankLatest Research (August 01, 2024):
OUR TAKE: Slight Positive.
TOU delivered solid/in-line Q2/24 results with free cash flow ~15% ahead of expectations on lower-than-expected capex. The company trimmed its Q3/24 production expectation (and full year average) on the deferral of certain completions until Q4/23 due to weak natural gas prices. At the same time, TOU plans to add a rig and increase drilling during the winter to add productive capacity in step with the pending North American LNG capacity additions. The company’s Q3/24 special dividend declaration for $0.50/share met our expectations, while the 3% base dividend increase came faster than we expected. We continue to believe TOU is well positioned to ride out weak near-term natural gas prices and shine as prices improve in 2025. With top tier (and consistently growing) drilling inventory depth, strong dividend growth, and premium marketing portfolio, we continue to see TOU as the best in class of the North American Large Cap gas natural group.
Their 1 year target remains unchanged at $90